General information on declaration of income of sole proprietors
Business means independent economic or professional activities of a person (incl. the professional activity of a notary, bailiff and sworn translator and the creative activity of a creative person), the aim of which is to receive income from the production, sale or intermediation of goods, provision of services or other activities, incl. creative or scientific activity.
- Income derived from business is declared on form E.
- Form E is submitted together with the form A of the income tax return of a natural person by 31 March of the calendar year following the period of taxation (calendar year).
- Sole proprietors are required to submit an income tax return even if they did not receive any business income at all or if the income was smaller than the basic exemption.
- Both form A and form E may be submitted either through the e-Tax Board/e-Customs or on paper.
- Submission of income tax return through the e-Tax Board/e-Customs is possible from 15 February. Form E is not pre-completed.
- Income tax return on business income (form E) must also be submitted by the persons who were not entered in the commercial register but who were engaged in business and have derived business income during a year.
- Business expenses and business income are taken into account in the year when the income was received or the expenses were made.
For example: A sole proprietor has delivered goods to a purchaser and in October the sole proprietor submitted an invoice in the amount of 500 euros. The sole proprietor received money for delivered goods next year in January. The amount of 500 euros is deemed to be the sole proprietor's income of the next year and it is not taken into account by declaration of income in the current year.
- If an enterprise is transferred to a person who continues the activities of a sole proprietor, the transferor shall submit an annex to Form E together with Form A and Form E by 31 March of the year following the period of taxation.
- Income tax return form E must be completed on the cash basis accounting, i.e. if a sole proprietor has had accrual basis accounting, he or she is required to adjust it to the cash accounting.
On form E income and expenses are entered inclusive of the value added tax.
Business income and expenses are taken into account in the year when the income was received or expenses were made (expenses paid).
Amounts entered on form E must be in compliance with the amounts entered in the accounting. When submitting the form E the annual accounting must be in organised and final form.